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ETR vs. WEC: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Utility - Electric Power stocks are likely familiar with Entergy (ETR) and WEC Energy Group (WEC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Entergy has a Zacks Rank of #2 (Buy), while WEC Energy Group has a Zacks Rank of #3 (Hold). This means that ETR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

ETR currently has a forward P/E ratio of 20.20, while WEC has a forward P/E of 24.71. We also note that ETR has a PEG ratio of 2.89. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WEC currently has a PEG ratio of 4.20.

Another notable valuation metric for ETR is its P/B ratio of 2.07. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WEC has a P/B of 2.71.

These metrics, and several others, help ETR earn a Value grade of B, while WEC has been given a Value grade of D.

ETR sticks out from WEC in both our Zacks Rank and Style Scores models, so value investors will likely feel that ETR is the better option right now.


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